Meridian Diversified (M) Sdn Bhd v Export-Import Bank of Malaysia Berhad (WA-22NCvC-519-08/2020)

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1 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE STATE OF WILAYAH PERSEKUTUAN KUALA LUMPUR WRIT SUMMON NO.: WA-22NCvC-519-08/2020 BETWEEN MERIDIAN DIVERSIFIED (M) SDN BHD (COMPANY NO.: 346087-U) … PLAINTIFF AND EXPORT-IMPORT BANK OF MALAYSIA BERHAD (COMPANY NO.: 357198-K) … DEFENDANT GROUNDS OF JUDGMENT Issues To Be Tried

Schedule

Schedule 2 of the Contract (Supplier’s Implementation Plan) as per letter (New Implementation Plan Proposal) dated 24.6.2019 and the brief discussion on 26.7.2019 which highlighted the decision by the EXIM’s Board of Directors on IBS project. 6. In the above letter, EXIM Bank informs that the New Implementation Plan Proposal had been presented to the EXIM Bank’s Board of Directors Meeting on 23.7.2019 and EXIM Bank would like to state as follows: (a) EXIM Bank agree to combine the implementation plan for both Trade and Non-Trade modules which Go Live date on 1.4.2020; (b) To hold the activities for Customisation and Unit Testing and System Walkthrough until further notice by EXIM Bank; and S/N brP2bvEvYU2TnkpwAs3A (c) Apart from item (b), other project activities such as UAT Test Plan & Data Migration Plan will be carried out as per “New Implementation Plan Proposal”. 7. The Defendant further states in the said letter as follows: (a) The New Implementation Plan may require further discussion on new proposal for New Implementation Plan and to be agreed by both parties; and (b) The finalised version of the New Implementation Plan shall be incorporated in the Addendum/Supplementary Agreement to be signed by both parties. 8. The Defendant’s Deputy President Operations Marazizi Bin Omar issued a “Notice for the termination of the Project” of the EXIM Bank’s Islamic Banking System dated 2.12.2019 (B2 p. 155) referring to Section 16.3 of the Supply and Service Level Agreement (for Hardware and Software IT/Computer Products). 9. Section 16.3 of the Agreement reads as follows: “Notwithstanding any provision to the contrary foregoing provided, either party hereto may terminate this Agreement by giving the other party ninety (90) days’ notice of termination in writing without having to give any reasons such termination S/N brP2bvEvYU2TnkpwAs3A to be effective upon expiry of such notice period. Thereafter no party shall have any claims against the other save for any antecedent accrued claims.” 10. The term “Deliverables” is expressly defined in Section 2.1 of the Agreement and essentially refers to the equipment and/or software, including related IT design documentation or infrastructure, to be supplied or delivered by Meridian to EXIM Bank from time to time in modular form for the implementation of the IBS. Plaintiff’s submissions (Encl. 109 and 116) 11. The Plaintiff submits that the deliverables were completed in accordance with the schedule under the Agreement. The Plaintiff commenced the deliverables by providing the Defendant with a project briefing on 18.1.2019. (see Minutes of Meeting B2 pp. 102 -105 and IBS Implementation Approach and Strategy B2 pp. 106 - 115) 12. The original project duration as stipulated in the Agreement is 18 months from 11.1.2019 to 10.7.2020. According to PW2 (Shaharuddin Bin Abdul Rahman, Director of Meridian), the Implementation Plan was revised whereby the project timeline was shortened from 18 months to 14 months (Notes of Evidence pp. 63 & 64). S/N brP2bvEvYU2TnkpwAs3A 13. The Plaintiff submits that the works carried out for the Project amounted to 90% completion of the customisation work at the time of the unlawful termination of the contract by the Defendant. (see para. 24 & Witness Statement of PW2 Q. 17) and that the works under Phase 2 & 3 accounted for only 10% of the total Project. The works carried out by the Plaintiff are as follows: Trade Finance Non-Trade Finance System Requirement Study System Requirement Study System Customisation System Customisation Conversion Plan & Program Conversion Plan & Program Integration Program Integration Program 14. The Plaintiff submits that the “Weekly Status Reports – IBS Project” were submitted to the Defendant demonstrating that all customisations work were carried out was in accordance with the schedule set for the Project. (see B2 pp. 176 – 404). In the Final Weekly Report dated 18.11.2019 (B2 p. 405) entitled “Summary Development Status as of 15 Nov. 2019” it was reflected that the Plaintiff achieved 100% of Phase 1 for the Trade System and 100% completion of Phase 2 for the Non-Trade System. S/N brP2bvEvYU2TnkpwAs3A 15. The Plaintiff further contends that the Court must adopt an interpretation that leans toward commercial sense. The structure of the termination provisions in the Agreement reflects the true intention and meaning behind Clause 16.3 that any termination under this Clause (section) must be done with the Plaintiff’s agreement and must be supported by reasonable justification. Defendant’s submissions (Encl. 107 and 113) 16. Prior to the issuance of the Notice of Termination, the Defendant notified the Plaintiff of the Defendant’s intention to terminate the Agreement and/or suspend the implementation of the Deliverables as follows: (a) On 23.7.2019, the Defendant’s Board of Directors decided to suspend the implementation of the Deliverables as the Defendant was re-evaluating and reviewing the Defendant’s strategy as a bank. This was immediately communicated by Defendant to the Plaintiff through a meeting on 26.7.2019 between the Plaintiff’s representatives and the Defendant’s representatives at the Defendant’s premises. (c) On 26.11.2019, the Defendant held a meeting with the Plaintiff at the Defendant’s premise to inform the Plaintiff S/N brP2bvEvYU2TnkpwAs3A of the Defendant’s intention to end the project on the IBS due to the Government’s decision to merge Small Medium Enterprise Development Bank Malaysia Berhad with the Defendant. 17. It is the Defendant’s case that: (a) The Defendant lawfully and validly terminated the Agreement pursuant to the express terms of Clause 16.3 of the Agreement; (b) The doctrine of legitimate expectation does not apply to matters of private law as this suit before this Honourable Court; (c) The Defendant had communicated to the Plaintiff of the Defendant’s intention to terminate the Agreement and/or suspend the implementation of the Deliverables as early as 26.7.2019; (d) In any event, any payments to be made by the Defendant under the Agreement are subject to prior certification and/or approval by the Defendant; and (e) If the Plaintiff had suffered any loss (which the Defendant denies), the losses are all due to the Plaintiff’s own S/N brP2bvEvYU2TnkpwAs3A conduct as the Plaintiff had a duty to mitigate its losses once it was aware of the Defendant’s intention to terminate the Agreement and/or suspend the implementation of the Deliverables. 18. The Submissions of the Defendant in a nutshell are as follows: (a) Meridian has no valid cause of action for wrongful and/or invalid termination of the Agreement. The Agreement was lawfully and/or validly terminated pursuant to Section 16.3 of the Agreement. Meridian is bound by the terms of the Agreement, to which it had freely agreed, and is estopped from belatedly seeking to resile from its contractual bargain; (b) Meridian has no valid cause of action based on legitimate expectation. The doctrine of legitimate expectation is a public law concept and does not apply to Meridian’s private law claim in contract; (c) The Meridian is not entitled to the full balance contract sum, as Meridian has admittedly not completed all the required work under the Agreement. PW2’s testimony confirmed that key milestones – such as System Integration Test, User Acceptance Test, Conversion of S/N brP2bvEvYU2TnkpwAs3A Data, System Cut-Over and Warranty – had not been carried out and/or completed; and (d) Meridian is contractually barred from claiming damages, as the Agreement has been validly and/or lawfully terminated pursuant to Section 16.3 of the Agreement, and Section 16.3 expressly provides that upon such termination, “no party shall have any claims against the other save for any antecedent accrued claims”. Filing of Additional Submissions 19. The Plaintiff’s solicitors filed Additional Submissions (Encl. 117) on 2.10.2025 seeking leave of Court to do so. On the even date by Encl. 118, the Defendant’s solicitors objected to the filing of the said Additional Submissions on the grounds of late filing as follows: (a) the date of Decision was fixed on 10.10.2025; (b) the Oral Submission was heard on 12.9.2025; and (c) the direction for filing of Submissions and Reply Submissions has already lapsed. S/N brP2bvEvYU2TnkpwAs3A 20. The Court is in agreement with the objection outlined by the Defendant’s counsel and therefore the said Additional Submissions (Encl. 117) ought to be disregarded by Court. The Law 21. The Federal Court in the case of SPM Membrane Switch Sdn Bhd v. Kerajaan Negeri Selangor [2016] 1 MLJ 464 which has decided as follows: “When one has to choose between two competing interpretations, the one which made more commercial sense should be preferred if the natural meaning of the words was unclear. Under cl 9, the review procedure gave the opportunity for the respondent to review the appellant’s performance, but this was by no means unilateral as a matter of procedure. The terms of cl 9 made this clear. Clause 9.1 for instance, obliged the parties to agree upon the terms and conditions of the review prior to any review occurring. This was clearly meant to protect the interests of both parties, ie the interest of the respondent in ensuring that the unsatisfactory situation was remedied, and the interest of the appellant in avoiding breach and termination of the contract. Arguably the purpose of this clause leans in favour of protecting the position of the appellant against wilful termination for one, and to provide an added layer of S/N brP2bvEvYU2TnkpwAs3A protection in that it was given the opportunity to ‘remedy the unsatisfactory situation’ in 30 days. It could not be the case that the respondent was allowed to circumvent the purpose of cl 9 by invoking unilateral termination under cl 8.1 (b) when cl 9.3 itself refers to cl 8.1(b) as a means of protecting the respondent’s interests. Thus in stating that there was a right under cl 8.1 to be exercised independently of cl 9, the Court of Appeal failed to appreciate the niceties or nuances of the contractual terms upon proper construction. Thus, it could be concluded that upon a true construction of the contract, cl 9 should be invoked and satisfied before termination under cl 8.1 (b) could be validly exercised so as to ensure that the meaning and purposes of the two clauses were not lost or rendered nugatory by operation of the other (see paras 74–78 & 94).” 22. The Court of Appeal in the case of NVJ Menon v. The Great Eastern Life Assurance Co Ltd. [2004] 3 CLJ 96 decided as follows: “[16] … It would be noticed that we have in arriving at our aforesaid conclusion made no reference to the oral evidence led at the trial as to the meaning and interpretation of the contract between the parties. This is because the construction of a contract is a question of law for S/N brP2bvEvYU2TnkpwAs3A determination by the court and not by witnesses through their oral evidence.” 23. The Court of Appeal in the case of Tahan Steel Corp Sdn Bhd v. Bank Islam Malaysia Bhd [2012] 2 MLJ 314 decided as follows: “[99] It is trite that the rights, interests and obligations of all parties to the agreement are spelt out in the various sections of the agreement and it is within the four corners of the agreement that such rights, interests and obligations have to be interpreted and determined…” 24. The Federal Court in the case of Sumbangan Aneka v. KNK Development Sdn. Bhd. & Ors [2021] 4 MLJ 514 decided as follows: “[39] To summarise, what we have decided above basically is to give effect to what the parties themselves have agreed in their agreements as to the particular event that gives rise to the right to terminate and the consequences following such termination. In this regard it is pertinent to reproduce what was held by the House of Lords in Trollope and Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601 which was quoted by this court in S/N brP2bvEvYU2TnkpwAs3A SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464: The court does not make a contract for the parties. The court will not even improve the terms which the parties have made for themselves, however desirable the improvement might be. The court’s function is to interpret and apply the contract which the parties have made for themselves. If the express terms are perfectly clear and free from ambiguity, there is no choice to be made between different possible meanings: the clear terms must be applied even if the court thinks some other terms would have been suitable. An unexpressed term can be implied if and only if courts finds that the parties must have intended that term to form part of their contract.” 25. The provisions with regards to Burden of Proof as set out in sections 101 and 102 of the Evidence Act 1950 as follows: “Burden of proof 101. (1) Whoever desires any court to give judgment as to any legal right or liability, dependent on the existence of facts which he asserts, must prove that those facts exist. S/N brP2bvEvYU2TnkpwAs3A (2) When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. On whom burden of proof lies 102. The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.” Intention of the parties 26. The sole function of the Court in construing a document (in this case the Agreement) is with a view to finding the intention of the parties. The Supreme Court in the case of Raja Zainal Abidin Raja Haji Tachik & 3 Ors v. British-American Life & General Insurance Bhd. [1993] 3 CLJ 606 at p. 607 decided that: “[1] The sole function of the Court was to construe a document with a view to finding the intention of the parties. The function was in reality to find the meaning of the words, for such meaning is equivalent to such intention of the parties for the purpose of interpretation.” S/N brP2bvEvYU2TnkpwAs3A Analysis and Decision 27. The Court shall analyse the contemporaneous documents produced by parties for the determination of the Plaintiff’s claim. Pursuant to the Agreement, the Plaintiff agreed to supply the Deliverables to the Defendant in accordance with the terms and conditions of the Agreement. In return, the Defendant agreed to pay the Charges to the Plaintiff based on the payment set out in

Schedule

Schedule 4 of the Agreement. The relevant meaning and definition of the terms in Section 2.1 of the Agreement are as follows: (i) “Deliverables” mean the Equipment and/or Software including all or any IT design document/infrastructure to be supplied or delivered by Meridian to EXIM Bank from time to time in modular form in accordance with each required Modules and/or as described/specified in Schedule 2; (ii) “Charges” mean the charges for the provision of the Deliverables as set out in Schedule 4; and (iii) The “Contract Sum” means RM10,793,000.00, being the price of the Deliverables inclusive of 6% service tax. S/N brP2bvEvYU2TnkpwAs3A 28. The Defendant has paid a total of RM 2,163,230.00 to Meridian for all work successfully completed and signed off by the Defendant prior to the termination of the Agreement. 29. All of these payments were made in accordance with Sections 9.1.1 and 9.1.2 of the Agreement which, among others, require EXIM Bank to pay the Charges to Meridian upon receipt of a duly signed progressive Certificate of Acceptance and based on the payment milestones set out in Schedule 4 of the Agreement as follows: Work Completed and Signed Off Item and Agreed Amount in Schedule 4 Invoice Issued by Meridian Amount Paid by EXIM - Item A (1) – Upon Signing of Agreement (RM393,750.00) Invoice No. 0000613 dated 21.3.2019 (B2, p. 169) RM393,750.00 Completion of Requirement Study Item A (2) – Completion of Requirement Study (RM1,230,480.00) Invoice No. 0000614 dated 8.7.2019 (B2, p.168) RM1,230,480.00 Delivery of Third-Party Hardware / Software Item B (1) – Upon Delivery (RM161,700.00) Invoice No. 0000618 dated 30.9.2019 (B2, p. 167) RM161,700.00 Installation of Third-Party Hardware / Software Item B (2) – Upon Installation Sign-Off (RM377,300.00) Invoice No. 0000619 dated 14.10.2019 (B2, p. 166) RM377,300.00 Total RM2,163,230.00 S/N brP2bvEvYU2TnkpwAs3A 30. The Court is of the considered view that the weekly reports reflect actual progress as the Agreement required the Plaintiff to provide weekly and monthly reports throughout the duration of the Project as provided in Section 10.2.6 and Section 11.1.25 of the Agreement (B2 p. 27 & 30) as follows: “10.2.6 prepare and submit monthly project status reports to the Bank’s Project Manager; 11.1.25 the supplier shall provide or otherwise submit periodic progress report every two (2) weeks and monthly reports on or before the 5th of each of the following month or as and when required by the Bank following the implementation/roll-out of the Islamic Banking System under the Deliverables.” 31. The Project was governed by a committee known as the IT Steering Committee under the Project Management Office”. This Committee was the highest-level body overseeing the Project. The Steering Committee itself referred to the Plaintiff’s weekly progress reports. DW1 admitted that the Steering Committee refer to the weekly reports submitted by the Plaintiff. (Notes of Evidence pp. 286 & 287). The Plaintiff refers to the statement of PW2 (Notes of Evidence p. 89) as follows: “HA: Adakah Encik Shaharuddin tahu apakah dokumen yang digunakan atau dibuat rujukan oleh committee ini? S/N brP2bvEvYU2TnkpwAs3A PW2: Saya… Sekiranya dokumen itu dating daripada kami dan hanya saya percaya datangnya daripada weekly report yang kita hantar kerana tiada dokumen lain yang kami hantar sebagai progress report. Effect of Termination of Agreement 32. The Defendant had unilaterally terminated the Agreement for the Project by letter dated 2.12.2019 (B2 p. 155). The termination of the Project prevented the Plaintiff from proceeding with the system walkthrough and user acceptance testing. The system walkthrough was postponed with the note “Postponed until further notice from PMO.” (B2 p. 404) The Plaintiff submits (para. 61) that it was due to the postponement that the Plaintiff was unable to obtain the Certificates of Completion for the work completed. (see Evidence of PW2 in the Notes of Evidence p. 146) Whether the termination of the Agreement by the Defendant is valid based on Section 16.3 of the Agreement? 33. The Defendant had breached the Supply and Service Level Agreement dated 19.3.2019 by issuing a Termination Notice dated 2.12.2019. The Defendant unilaterally and wrongfully terminated the Agreement without obtaining the Plaintiff’s prior consent regarding Section 16.3 of the Agreement pertains to a termination by mutual agreement and that no reason was S/N brP2bvEvYU2TnkpwAs3A given. (paras. 85 & 86 Plaintiff’s submission). Section 16.3 clearly contains the sub-heading “Mutual Termination by Notice” indicating that any termination under this Clause (section) must be based on mutual consent. 34. Sections 16.1 and 16.2 of the Agreement expressly list the specific grounds and/or circumstances under which either party may terminate the Agreement. The Court is inclined to agree with the submissions of the Plaintiff that if Clause 16.3 were to be interpreted as allowing either party to issue a termination notice without providing any reason and without mutual consent, it would render Section 16.1 of the Agreement nugatory and without legal effect. 35. Needless to say, the provision in respect of “Termination” (Article XVI) Section 16 (Events of Termination) in Section 16.1.2.1 and Section 16.3 (Mutual termination by notice) prescribe different procedures for termination and cannot operate concurrently in the same set of circumstances. 36. Specifically, if Section 16.3 is interpreted as allowing unilateral termination without cause and without affording any opportunity for remedy, it would, in effect, negate the entire purpose and effect of Section 16.1.2.1, which provides a remedy period for the defaulting party. As a result, the protection afforded by Section S/N brP2bvEvYU2TnkpwAs3A 16.1.2.1 to the alleged breaching party would become entirely meaningless. 37. The sub heading in the said Agreement may not be considered a provision in itself. However, the sub heading can assist the Court in assessing and determining the true interpretation or actual intention of the provisions within the Agreement. Sanctity of a contract 38. It is trite law that the sanctity of a contract should be preserved. As decided in Tay Yew Chong v. Koh Hooi Siang & Ors [2021] 1 CLJ 221 at p. 233, the Court of Appeal decided as follows: “[33] It is elementary that in construing a contract, the whole contract has to be considered with reference to its object and the whole of its term (see Chitty on Contracts, vol. 2012, 31 edn. At p. 943) In SPM Membrane Switch Sdn. Bhd.v. Kerajaan Negeri Selangor [2016] 1 CLJ 177, the Federal Court held that the court must approach the interpretation of a contract holistically, no term is to be taken or interpreted in isolation. [34] The court cannot be rewriting the contract for the parties by imposing a term which could not be imported into the contract or go behind the written terms of the contract to introduce or add new terms to it.” S/N brP2bvEvYU2TnkpwAs3A 39. The Court’s role is not to rewrite the Agreement or improve upon its terms to make them fairer or more reasonable. When the terms of the Agreement are clear and unambiguous, the Court is duty bound to give effect to their ordinary meaning and must not impose any implied terms. (see Sumbangan Aneka, supra) 40. The construction of a contract is a question of law for determination by the court and not by the witnesses through their oral evidence. (see NVJ Menon v. The Great Eastern Life Assurance Company Ltd. [2004] 3 CLJ 96 Court of Appeal) 41. In the instant case, based on the construction of the Agreement, I am of the considered view that there lies no ambiguity as to the intention of the parties and that the contractual obligations of the parties were clearly spelt out in the terms and conditions of the Agreement (Section 16.3) in the instant case. It is a fundamental principle of contract law that parties are bound by the terms of the contract to which they have freely agreed, and that it is the contract alone which governs the relationship between the parties. (Tahan Steel Corp., supra) Where the terms of a contract are clear and free from ambiguity, the Court will not impose any implied terms. (see Seven Seas Industries Sdn. Bhd. v. Philips Electronic Supplies (M) Sdn. Bhd. & Anor. [2008] 5 MLJ 157 CA) S/N brP2bvEvYU2TnkpwAs3A Whether the Plaintiff is entitled to claim the remaining contract value of RM8,629,770.00 as compensation due to the termination by the Defendant? 42. The critical issue to be determined is whether the Plaintiff is entitled to claim the remaining payment amounting to RM8,629,770.00 as the Defendant has breached the Agreement by issuing a Termination Notice that lacked mutual consent and was made without providing any reasons. In this respect the Court finds that: (a) there was no breach committed by the Plaintiff throughout the Agreement; (b) there were no complaints raised by the Defendant preceding the Termination of the Agreement regarding the Plaintiff’s work on the project; and (c) the project implementation records (Weekly Status Report) demonstrated that the Plaintiff had performed its obligations satisfactorily without proof of breach of the said Agreement. S/N brP2bvEvYU2TnkpwAs3A 43. Since the unilateral termination dated 2.12.2019 was caused by reasons/actions attributable to the Defendant, did the Defendant commit constructive breach of contract? The Defendant cannot disable itself from performing a contract brought about by its own acts. (see Akitek Tenggara Sdn. Bhd. v. Mid Valley City Sdn. Bhd. [2007] 5 MLJ 697) 44. The Plaintiff submits that they are entitled to the amount claim at RM8,629,770.00 particularly given that 90% of the project work had been completed and the system developed by the Plaintiff was specifically tailored for the Defendant. (see PW2’s evidence in pp. 95 & 96 of the Notes of Evidence). Therefore, the claim of RM8,629,770.00 is disallowed. 45. Be that as it may, the Court hereby allows the calculation for the payment of 90% of the amount outstanding of the project work that completed as claimed by the Plaintiff to be calculated as follows: Contract sum: RM10,793,000.00 90% work done: RM9,713,700.00 minus Amount Paid: RM2,163,230.00 Outstanding Amount Allowed: RM7,550,470.00 S/N brP2bvEvYU2TnkpwAs3A Summary of Court’s analysis. 46. The Court hereby makes the following findings: (a) The termination of the Agreement by the Defendant was wrongful and/or invalid; (b) Payment of RM7,550,470.00 (being 90% of the amount outstanding) to paid to the Plaintiff by the Defendant as compensation; (c) Interest of 5% per annum from the date of judgment until full settlement; (d) Cost of RM30,000.00 to be paid (subject to allocatur) forthwith by the Defendant to the Plaintiff. Conclusion 47. In the circumstances, the Court finds that the Plaintiff has proven their claim on a balance of probabilities. Consequently, the Plaintiff’s claim in the Statement of Claim (Encl. 2) in paragraph 40 is hereby allowed subject to paragraph 46 (a) to (d) above. S/N brP2bvEvYU2TnkpwAs3A Decision 48. Based on the aforesaid reasons, the Plaintiff’s claim against the Defendant is allowed with costs of RM30,000.00 (subject to allocatur). Dated: 10 October 2025 sgd ………………………………………….. (EDDIE YEO SOON CHYE) Judicial Commissioner High Court of Malaya Kuala Lumpur Counsel for the Plaintiff: Dato’ Hazman bin Ahmad & Muhammad Irsyad bin Mohamad Hassan. Messrs. Omar Ismail Hazman & Co. Kuala Lumpur. Counsel for the Defendant: Manshan Singh, Ho Pui Yan & Chong Zheng Yang (PIC) Messrs. Skrine Kuala Lumpur. S/N brP2bvEvYU2TnkpwAs3A